THE pandemic losses it estimated of over P41 trillion in four decades could be the worst-case scenario for the Philippines, particularly if mistakes committed in 2020 are repeated this year and onward, the National Economic and Development Authority (Neda) said on Sunday.
On Saturday, Socioeconomic Planning Secretary Karl Kendrick T. Chua had said the pandemic and the government-imposed lockdowns could imperil the economy for the next 40 years (See story here: https://businessmirror.com.ph/2021/09/25/neda-pandemic-to-cost-phl-economy-p41-4-trillion-in-total-losses-over-next-40-years/).
This means, Chua explained on Sunday, that the government must work double-time to meet its development goals such as achieving the Sustainable Development Goals (SDGs) and reaping the demographic dividend.
“[This is a] base case [scenario] if we don’t do more to reduce the impact,” Chua told BusinessMirror. “[This is a] worst case [scenario] if we don’t learn from 2020 and repeat [the] same mistakes in 2021 onwards.”
Chua stressed that his recommendations stand in order to prevent further economic losses. His primary recommendation is to accelerate vaccination against Covid-19, saying that 70 percent of all adult Filipinos must be vaccinated by the end of 2021.
This can be done by expanding vaccination sites, including work sites, removing artificial barriers, and using technology to reduce the wait and processing time.
He also cited a need to better manage risks, taking into consideration the role of the most restrictive community quarantines in delaying a surge in cases.
The Neda chief said managing risks means opening the economy safely, allowing selected family activities to resume, allowing limited face-to-face schooling, and imposing localized lockdowns in highest-risk areas, which is currently being piloted in Metro Manila.
Chua pushed for an aggressive recovery program, in particular, the timely use of the 2021 budget, and reprioritizing the budget to the most important programs.
“We will have to double time to catch up and address the gaps caused by the pandemic once we are able to vaccinate more and open the economy more,” Chua told this newspaper.
Local economists supported Neda’s estimates, calling it a practical view given the current situation.
Unionbank Chief economist Ruben Carlo O. Asuncion said the estimates are a “realistic assessment and expectation.”
This is especially true, he said, when it came to prepandemic growth momentum. He shared the view that prepandemic growth level may be reached by the end of 2022 or early 2023, as pre-pandemic growth momentum will take longer.
“[Growth] level and momentum are not exactly the same or not exactly defined the same way. We think that the economic scars that the pandemic has inflicted on the economy will take time especially on productivity and human capital development,” Asuncion told BusinessMirror.
Ateneo economists, meanwhile, believe Neda’s view may be more pessimistic than expected.
Ateneo Center for Research and Development (ACERD) Associate Director Ser Percival K. Peña-Reyes told BusinessMirror a review of the history of the Philippine economy shows it recovered its 1983 GDP growth momentum only in 1989.
The years 1983 and 1984 plunged the economy into a recession. The economy suffered massive capital flight and even declared a debt moratorium that time.
“It took us six years to recover. This one’s far worse than that episode, so if we don’t get our act together, then recovery will take longer than we hope for,” Peña-Reyes said.
“It [Neda estimates] is not far-fetched, so if the government itself acknowledges this, then it should work doubly hard on its recovery and resilience game plan,” he also said.
Ateneo de Manila University John Gokongwei School of Management Dean Luis F. Dumlao said Neda’s estimate can easily turn into a worst-case scenario if the country fails to attain herd immunity.
This worst-case scenario is also possible if the economy and classes are not opened safely and soon, and if the budget is not implemented.
Technically, Dumlao said, these three considerations are doable. The government just needs to implement them.
“We are vaccinating 400,000 jabs per day. This is accelerating. Barring any setback, like a new variant or natural catastrophe, we can vaccinate all adults by the end of the year,” Dumlao said.
On Saturday, Chua said the economy lost P4.3 trillion in 2020 and is expected to continue to lose another P37 trillion in the next 10 to 40 years.
The total losses are P4.5 trillion in consumption; P21.34 trillion in private investment and returns; and P15.528 trillion in human capital investment and returns.
Consumption losses are P2.090 trillion in 2020 and P2.412 trillion in the next 10 to 40 years.
Neda data showed that under private investment and returns, the expected losses entail P1.835 trillion in 2020 and P19.501 trillion in the next 10 to 40 years.
Of the total private investment and return losses, P3.271 trillion is composed of 2020 investment and its returns; P18.064 trillion in future year investment and returns; and P1.206 trillion in taxes including value-added tax and personal income tax, among others.
In terms of human capital investment and returns, the losses are P11.025 trillion in education investments and P4.503 trillion in health for Covid-19 and non-Covid-19 diseases.